Social Policy in a Cold Climate: 'Selective austerity' since the financial crisis

27 April 2016

A new LSE book bringing together findings from research co-funded by the Nuffield Foundation offers an authoritative, evidence-based analysis of the impact government policies have had on inequality and on delivery of services such as health, education, adult social care, housing and employment since the 2008 recession.

The editors, Ruth Lupton, Tania Burchardt, John Hills, Kitty Stewart and Polly Vizard, conclude that although the financial crisis and subsequent recession hit the economy hard, Britain’s welfare state did initially protect many of the most vulnerable from its sharpest effects. But that protection was not uniform. Young adults were hardest hit in the labour market, for example, while those of pension age had their incomes improved faster than inflation.

A unique appraisal of Labour and the Coalition's impact

Published by Policy Press from research carried out by the Centre for Analysis of Social Exclusion (CASE) at LSE, the book provides an unflinching analysis of recent approaches to social policy and their outcomes following the financial crisis, with particular focus on poverty and inequality. Through a detailed look at spending, outputs and outcomes, “Social Policy in a Cold Climate” offers a unique appraisal of Labour and the Coalition’s impact as well as an assessment of future directions under the present Conservative government.

Public spending cuts

While the Brown government continued its spending plans after the crisis, to avoid making the recession even worse and to sustain the social programmes it had started in more favourable times, the Coalition’s response was to try to reduce the resulting deficit fast. It also decided to achieve most of this through public spending cuts rather than higher taxes. But it protected the NHS, schools and pensions – all very big areas of public spending – from major cuts and implemented expensive commitments, particularly greatly increasing the tax-free Income Tax personal allowance and introducing a more generous system for uprating state pensions.

The result was heavy cuts in ‘unprotected’ areas such as early years provision, adult social care, further education, housing and other local government services – a ‘selective austerity’. Despite the aim that the better-off should contribute a greater share of income than the poor, the net effect was the reverse across most of the income distribution.

Ruth Lupton said: “When he resigned, Iain Duncan Smith asked the government to look again at the balance of the cuts and queried whether enough had been done to ensure that ‘we are all in it together’. The analysis in the book suggests that this was far from the case.”

The book is published as part of the SPCC research programme funded by the Joseph Rowntree Foundation and the Nuffield Foundation, with London-specific analysis funded by the Trust for London. The views expressed are those of the authors and not necessarily those of the funders.